Why the Caribbean Cruise Line Record-Breaking TCPA Settlement Could Contribute to “The End of the [TCPA] World As We Know It” (and We Feel Fine)

Caribbean Cruise Line Settlement

(Revised 10/13)

A Telephone Consumer Protection Act (“TCPA”) class action litigation, Birchmeier, et al. v. Caribbean Cruise Line Inc., et al., No. 1:12-cv-04069 (N.D. Ill.), has been winding its way through the court system for four years and finally settled this month. Caribbean Cruise Line and its co-defendants, who were sued for violating the TCPA by allegedly robocalling millions of individuals with offers for free cruise trips, will now pay between $56 million and $76 million, to settle claims of the approximately one million person class who received such calls from the defendants in 2011 and 2012, after the Northern District of Illinois certified several classes, granted partial summary judgment to the plaintiffs, and denied the defendants’ motions to decertify the class and for summary judgment in their own right. Individual class member recovery will be based on the number of valid claims submitted, with each class member being entitled to $500 for each call received (with a rebuttable presumption that each class member received three calls) but subject to reduction pro rata if the total payments exceed $76 million, after the costs of administration, incentive awards to the four class representatives ($10,000 each), and any award of attorneys’ fees (at most $24.5 million) are factored in. (should total payments at $500 per call (plus administration costs, incentive awards, and attorneys’ fees) be less than the $56 million settlement floor, each class member may receive a pro rata payment of more than $500 per call up to a maximum of $1,500 per call.) If the settlement is approved and Caribbean Cruise Line ultimately ends up paying the $76 million, then, as the plaintiffs’ attorneys noted in their motion for preliminary approval, the settlement “promises to go down as the largest settlement in TCPA history.”

The TCPA is Outdated and Functions to Line Plaintiffs’ Attorneys’ Pockets

The Caribbean Cruise Line settlement may serve as the poster child for what’s wrong with the TCPA. For years, opponents of TCPA litigation have argued that the TCPA is both outdated and merely a way to line attorneys’ pockets. The Caribbean Cruise Line settlement does not differ in that it allows for the plaintiffs’ attorneys to seek an award of up to $24 million versus the $56 million settlement floor and the $76 million settlement ceiling. (Plaintiffs’ counsel have indicated however that they will not seek the maximum allowable amount if the $76 million settlement ceiling is not hit.) However, it seems likely that the claims will exceed the cap. For example, if all class members submit a valid claim for just one call (let alone the three calls presumed under the settlement), then the ceiling on the settlement would be surpassed by about $424 million and each class member would be entitled to receive $50 (assuming the maximum amount of attorney’s fees were sought and granted and some additional administrative costs). In such a scenario, each class member would receive substantially less than what he or she possibly could recover as much as $500 by bringing their own individual TCPA action in small claims court – where filing costs are generally well-below $100 and an individual may represent himself or herself pro se – and simply relying on the liability finding made by the Caribbean Cruise Line court. (alternatively if only a third of the potential class filed for the presumptive three claims, the outcome is the same.) Recent research has shown that lawyers, by contrast, have received an average of $2.4 million as part of TCPA class action settlements. While this settlement could well end up being the highest TCPA settlement to date, it nevertheless certainly appears that it will amply take care of the attorneys.

Recent Congressional Hearing on TCPA Effectiveness

Indeed, this sentiment was expressed in a recent congressional hearing on modernizing the TCPA. Representative Blackburn (R-TN) in particular emphasized the disconcerting uptick in TCPA litigation, which she cited as having grown 940% from 2010 to 2015. (A list of the most recent TCPA class action complaint filings is available here.) She also noted how the average payout of $2.4 million to attorneys suggested that lawyers were using the TCPA as a personal “piggy bank.”

The hearing, “Modernizing the Telephone Consumer Protection Act,” was held by the House Energy and Commerce Committee’s Subcommittee on Communications and Technology on September 22, 2016. The hearing primarily addressed how changes in technology, including the ubiquitous use of cell phones, have impacted the effectiveness of the TCPA and whether changes in the law may be necessary to reflect these social and technological changes. Committee members stressed that the TCPA is outdated and hinders legitimate consumer outreach. The hearing also addressed the issue of caller ID spoofing, a mechanism frequently used by scammers to hide their identity and evade law enforcement. The Committee was in agreement that addressing these technological issues will be important to effectively target many of the bad actors that the TCPA was intended to address in the first instance.

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